Core Viewpoint - The article emphasizes the critical role of indium phosphide (InP) in the future of computing power, particularly in the context of AI and data centers, highlighting its unique properties that make it essential for high-speed optical communication [1][2]. Group 1: Indium Phosphide's Unique Properties - InP exhibits over ten times the electron mobility of silicon, making it suitable for high-frequency applications [2]. - It is particularly advantageous for optical communication at key wavelengths of 1310nm and 1550nm, where it can efficiently produce photonic devices [2]. - InP's high thermal resistance and radiation tolerance are crucial for AI servers operating in high-temperature environments [2]. Group 2: Market Demand and Growth - The global AI infrastructure spending is expected to exceed $1 trillion by 2026, driving demand for high-speed optical modules [1][5]. - The demand for InP devices is projected to reach 2 million units by 2025, with a supply gap of 70% as current production capacity is only 600,000 units [10]. - The market for InP is anticipated to grow at an annual rate of over 25% in the next five years, marking a historic growth period [6]. Group 3: Applications and Industry Expansion - InP is becoming increasingly important in various fields, including AI data centers, laser radar, 5G/6G mobile communication, and quantum computing [8]. - The commercialization of Co-Packaged Optics (CPO) technology is expected to further increase the demand for InP, as it reduces power consumption significantly [6][7]. - The global market for CPO is projected to grow approximately 166 times by 2030, indicating a substantial opportunity for InP [7]. Group 4: Global Market Dynamics - The InP industry is currently dominated by a few key players, with Japan's Sumitomo Electric holding a 60% market share [9]. - Major companies are expanding production capacities to meet the surging demand, but the market remains highly oligopolistic, with over 95% of production capacity controlled by a few firms [10]. - Domestic companies in China are making strides to break the foreign monopoly, with several firms achieving significant advancements in InP substrate production [11][13]. Group 5: Challenges and Future Outlook - The InP industry faces challenges related to production costs and technology, particularly in crystal growth processes that are complex and yield variable results [17][18]. - Despite these challenges, the industry is exploring ways to reduce costs through larger wafer sizes and improved production techniques [18]. - The geopolitical landscape and export controls are adding uncertainty to the supply chain, but they also drive nations to strengthen their domestic industries [19].